New decree replaces regulations on logistics business

February 22, 2018 | 17:07

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From February 20, 2018, logistics businesses have to meet the business conditions outlined in Decree No.163/2017/ND-CP on logistics services, replacing Decree No.140/2007/ND-CP.

new decree replaces regulations on logistics business

Decree 163 introduces an explicit requirement to comply with e-commerce regulations

Logistics is one of the services holding great potential in the country at the moment. Based on the current total export and import turnover of $425 billion and the increasing trend, the development potential of logistics services remains strong in Vietnam and is even stronger in the ASEAN. Thereby, the Vietnamese government encourages logistics businesses to take advantage of the opportunities.

Issued in 2007, at the time of Vietnam’s accession to the WTO, Decree 140 is ancient by Vietnamese legal standards. The law has moved on since then, as Vietnam opened up most service sectors to foreign investors, including many (but not all) business activities in the logistics sector.

Foreign investors and Vietnamese businesses seeking foreign investment must closely review each business activity they plan to conduct in Vietnam to see if foreign ownership limitations and other conditions apply. Article 3 of the new Decree 163 defines and regulated “logistics services” as follows:

Logistics services under Article 3 of Decree 163

Container handling services, except for provision of such services at airports;
Container warehousing services as part of maritime transport support services;
Warehousing services as part of support services for all modes of transport;
Delivery services;
Freight transport agency services;
Customs brokerage services (including customs clearance services);
Other services including the following activities: bill of lading inspection, freight brokerage services, cargo inspection, sampling and weighing services; goods receipt and acceptance services; and transport documentation preparation services;
Wholesaling support services and retailing support services including activities being management of goods in storage, collection, sorting and classification of goods, and goods delivery;
Freight transport services as part of maritime transport services;
Freight transport services as part of inland waterway transport services;
Freight transport services as part of rail transport services;
Freight transport services as part of road transport services;
Air transport services;
Multimodal transport services;
Technical analysis and testing services;
Other transport support services;
Other services provided by logistics service providers and as agreed with their clients in accordance with the basic principles of the Commercial Law.

The below chart summarises the main foreign ownership limitations (FOL) in the logistics sector.

Foreign Ownership Limitations (FOL) in the logistics sector under Decree 163 in comparison to Vietnam's WTO Services Sector Commitments (WTOSSC) (Unit: per cent)

Service Description	FOL (under WTOSSC)	FOL (under Decree 163)
Storage and Warehouse	100	x
Freight transport agency (including freight forwarding services)	100	x
Bill auditing; freight brokerage; freight inspection, weighing and sampling; freight receiving and acceptance; transportation document preparation on behalf of cargo owners	99	99
Maritime transport (Passengers; less cabotage)	49	x
(a) Maritime transport (Freight; less cabotage) – joint-venture fleet flying Vietnamese flag	49	49
(b) Maritime transport (Freight; less cabotage) – foreign fleet	100	100
Internal waterways transport (Passengers)	49	x
Internal waterways transport (Freight)	49	49
Rail transport (Passengers)	Unbound	x
Rail transport (Freight)	49	x
Road transport (Passengers)	49	x
Road transport (Freight)	51	51
Custom clearance	99	x
Container station and depot	100	x
Container handling (except at airports)	50	50
Distribution (import/export, commission agents, wholesale, retail)	100	x

One thing that is new in Decree 163 is its express requirement to comply with Vietnam’s e-commerce regulations. Article 4(2) provides that a logistics business conducting part of or its entire business electronically over the Internet, mobile or other “open networks” must comply with e-commerce regulations.

Vietnam’s main e-commerce regulation is Decree No.52/2013/ND-CP, which requires e-commerce service providers to either notify or register at the Ministry of Industry and Trade.

E-commerce providers must also protect personal information and consumer interest in accordance with Decree 52 and other laws and regulations. These e-commerce requirements will be applicable to logistics services that conducted e-commerce activities before Decree 163.